Blog: Funeral plans: How new rules will help customers find a decent deal – The Money Pages

The funeral planning sector has had its fair share, or rather ‘unfair’ share, of negative press over the last few years, in some cases justified, but to the detriment of the reputation of the industry.

This has now changed, as of 29 July, new regulation came into force to rid the industry of the type of operators who have been responsible for this bad press.

It also offers funeral planning companies which are doing the right thing by offering credible products and services of value and treating customers with the fairness, the respect they deserve.

With this new regulation in place, the market will look completely different for consumers.

Over the last several years, the Funeral Planning Authority (FPA) had made significant progress in increasing quality standards amongst those who voluntarily signed up for independent scrutiny.

But, as of now, consumers can refer to a definitive list of companies who have been through, and passed, the stringent regulation process and have been given the green light to sell pre-paid funeral plans.

To start with, what are funeral plan products?

Funeral plan products allow people to pre-pay for their funeral, generally for a fixed cost, so relatives do not have to find the money at an extremely difficult time.

Plans can be sold by an intermediary such as a funeral director, or more usually, directly by a provider.

So, who is behind the regulation of these companies?

The Financial Conduct Authority (FCA), a financial regulatory body that regulates the conduct of 50,000 firms in the UK to ensure that the financial markets are honest, competitive and fair.

How many funeral plan providers have been given authorisation?

As of 29 July all funeral plan providers must be regulated by the FCA to sell or administer a funeral plan. The FCA has authorised 26 providers who between them, hold around 1.6 million plans.

What does this new regulation mean for consumers?

The newly imposed FCA regulation will bring about positive change for the sector whilst improving consumer confidence and ensuring better consumer outcomes. It will bring higher standards, more intensive scrutiny of the regulated companies themselves and ensure consumers are protected.

As with any legislation, there are many new rules which are as follows:

  • Cold calling customers is banned, and the new standards being placed on advertising will result in plans being marketed more clearly.
  • A ban on commission payments to intermediaries, such as funeral directors.
  • Plans must deliver value and perform as customers expect them to. Customers must be treated fairly, and Firms must demonstrate that they are doing so.
  • Listed providers are also directly responsible for the funeral and ensuring that the funeral is delivered in line with the specifications of the plan.

Customers will still be understandably wary, so how are they protected in light of the new legislation?

If you buy your funeral plan from one of the listed 26 authorised providers, you will have access to the Financial Services Compensation Scheme (FSCS) so that if this provider fails, your money is protected.

Customers will also be able to make a complaint to the Financial Ombudsman Service (FOS).

If your issue happened before July 2022, you can still lodge your complaint providing the firm was registered with the Funeral Planning Authority (FPA) at the time the issue occurred.

Will this new legislation make it easier for consumers to understand the product they are buying?

The FCA plans to introduce a new Consumer Duty from July 2023. This will apply to all listed funeral plan providers and will mean a significant extension to the already existing Treating Customers Fairly rules.

Customers should receive communications they can understand, products and services that meet their needs and offer fair value, and get the customer support they need, when they need it, with no obstructions.

The thought of purchasing a funeral plan can be stressful and upsetting – how will the new regulation make this purchase easier?

Consumers should feel both confident and comfortable now that arranging their funeral plans with any of these listed businesses will lead to them having a quality and secure funeral plan in place whenever it is required.

The list of 26 fully-regulated providers has each been through a stringent and lengthy evaluation process to reach the required standards. These firms have invested very considerable time, money and resources into bringing their standards in line and each one will now have to adhere to a strict and unrelenting set of rules and guidelines.

Consumers also know who they can complain to if they don’t feel secure in their purchase, and they will have full support.

Shopping around for a plan used to be like a minefield, not helped by the negative press surrounding the sector.

But if customers still want to shop around, there is a much smaller list to peruse and a guarantee that all options are now credible, safe and understanding of the vulnerability of many of the customers making this purchase.

Barry Floyd is the CEO of Golden Leaves Limited

You can find out which funeral planning firms have been authorised here.

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